U.S. Stocks Close Slightly Higher As Fed Meeting Looms

Stocks fluctuated over the course of the trading session on Friday before eventually ending the day modestly higher. With the uptick on the day, the S&P 500 reached its best closing level since mid-August.

The major averages swung back and forth before closing slightly above the unchanged line. The Nasdaq rose 20.62 points or 0.2 percent to 13,259.14, the S&P 500 crept up 4.93 points or 0.1 percent to 4,298.86 and the Dow inched up 43.17 points or 0.1 percent to 33,876.78.

For the week, the Nasdaq edged up by 0.1 percent, while the Dow and the S&P 500 climbed by 0.3 percent and 0.4 percent, respectively.

The lackluster performance on Wall Street came as traders continued to look ahead to the Federal Reserve’s monetary policy meeting next week.

Thursday’s report showing initial jobless claims jumped to their highest level since October 2021 last week added to the optimism about the Fed pausing its interest rates hikes, as the central bank has warned about the impact of labor market tightness.

Key inflation reports are also likely to be in the spotlight next week, as the data could have a significant impact on the outlook for interest rates.

CME Group’s FedWatch Tool is currently indicating a 71.2 percent chance the Fed will leave rates unchanged next week but a 53.0 percent chance of another quarter point rate hike in July.

Meanwhile, the uptick by the Nasdaq was partly due to a jump by shares of Telsa (TSLA), with the electronic vehicle maker surging by 4.1 percent to an eight-month closing high.

Tesla benefited from news General Motors (GM) announced a collaboration with the company to integrate the North American Charging Standard connector design into its electric vehicles beginning in 2025.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the relatively lackluster close by the broader markets.

Tobacco stocks showed a significant move to the downside, however, with the NYSE Arca Tobacco Index falling by 1.7 percent.

Notable weakness was also visible among gold stocks, as reflected by the 1.5 percent loss posted by the NYSE Arca Gold Bugs Index. The weakness in the sector came amid a modest decrease by the price of the precious metal.

Natural gas and chemical stocks also saw some weakness on the day, while airline and software stocks moved to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index surged by 2.0 percent, while China’s Shanghai Composite Index climbed by 0.6 percent.

Meanwhile, the major European markets moved to the downside on the day. While the U.K.’s FTSE 100 Index slid by 0.5 percent, the German DAX Index dipped by 0.3 percent and the French CAC 40 Index edged down by 0.1 percent.

In the bond market, treasuries gave back ground after turning higher over the course of the previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 3.1 basis points to 3.745 percent.

Looking Ahead

The inflation data and the Fed meeting are likely to be in focus early next week, while reports on retail sales, industrial production and consumer sentiment may attract attention later in the week.

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